Value-Added Producer Grants increase farmers' opportunity

"Value-Added Producer Grants increase farmers' income, establish jobs in rural communities, and expand food choices for American consumers," notes Helen Dombalis, Policy Associate with the National Sustainable Agriculture Coalition. "This program is exactly what our country needs as we seek ways to stimulate our economy."

NSAC | Feb 03, 2012

USDA announced[3] the recipients of the most recent rounds of Value-Added Producer Grants. The awards, which cover two funding cycles, span 298 projects in 44 States and Puerto Rico and total $40.2 million in funding. The Value-Added Producer Grants (VAPG) program provides competitive grants to individual independent agricultural producers, groups of independent producers, producer-controlled entities, and farmer or rancher cooperatives to create or develop value-added producer-owned businesses.

"Value-Added Producer Grants increase farmers' income, establish jobs in rural communities, and expand food choices for American consumers," notes Helen Dombalis, Policy Associate with the National Sustainable Agriculture Coalition. "This program is exactly what our country needs as we seek ways to stimulate our economy."

VAPG grants may be used to fund business and marketing plans and feasibility studies or to acquire working capital to operate a value-added business venture or alliance. Working capital applications must be supported by an independent feasibility study as well as a business plan. This round of awardees includes 62 planning grants (21 percent of the total awards) and 236 working capital grants (79 percent of the total awards).

Planning Grants

Steve McKaskle of McKaskle Farms exemplifies the economic utility of VAPG planning grants. His farm in Pemiscot, Mo., received a grant for $40,000 to evaluate the fiscal feasibility of purchasing milling equipment for rice, bread flour, and cornmeal; cleaning equipment for popcorn; and packaging equipment for all of their organic products. McKaskle has already captured a relatively significant market; he sells in seven Whole Foods stores, two Fresh Markets, and several other health food and natural food stores.

The issue, he clarifies, is a lack of processing equipment and therefore missed financial opportunities: "We are growing popcorn and rice and we are selling it to a buyer who is cleaning, milling, and packaging it and then selling it back to us at three times the amount they are buying the original products from us. We are taking a strong look at doing these things ourselves." And what will McKaskle do with his savings? "Create more jobs. We live in a poor county and want to help people on government assistance to break free from that."

Cody Hopkins of Falling Sky Farm in Marshall, Ark., a small, diversified livestock farm, also received funding for a feasibility study. There are currently no USDA poultry processing facilities in the state that will handle birds from independent growers. Therefore, Hopkins will use his $98,500 grant to research the possibility of working with a group of farmers to develop such a facility, which "would allow [them] to process more chickens and cooperatively market those chickens." Demand is high for pastured chickens like those Hopkins and his wife Andrea Todt raise, which are moved daily to fresh pasture, keeping them off of their own manure, eliminating parasite concerns and thus the need for antibiotics and other medications. There was a restaurant across state lines in Missouri wanting 10,000 such chickens, but without the USDA poultry processing facility Hopkins could not seize this economic opportunity. He explains, "we are getting to a point where we need to have more infrastructure, and farmers are having to create it."

As first generation farmers, Hopkins and Todt "didn't start off with a farm or any other capital. All the money [they] have access to has to go to operating expenses, and [they] didn't have anything to leverage to build a facility." Beginning farmers face challenges in amassing capital and credit for their operations. In the case of Falling Sky Farm and its "unorthodox" pastured chicken, Hopkins explains "a lot of lenders see us as risky, so the grant will help us assess the feasibility of our idea."

Working capital grants

For recipients of VAPG working capital funds, the production benefits can be quickly realized. Will Harris of White Oak Pastures in Bluffton, Ga., received a grant for $300,000 for his pastured poultry production. He spent a million and a half dollars building one of the only pastured poultry abattoirs, or slaughterhouses, in the Deep South. Harris says the grant "will help get the facility going." Not only does Harris's fifth generation farm invest in sustainable animal welfare and land usage practices, but it also invests in the economic sustainability of its community, currently providing 75 jobs and serving as the largest privately owned employer in the county. Harris notes that his grant "makes it possible to continue to move our practices forward."

Value-Added Producer Grants enable agricultural producers to attract new customers and thus to strengthen their revenues. Explains Sharon Klay with Christian W. Klay Winery in Chalk Hill, Pennsylvania, the recipient of a VAPG for $24,888: "One of the aspects of our grant is to bring the public to our farm. We are heavily oriented towards tourism; people are curious about grape growing and wine tasting. The grant will broaden the appeal." Klay Winery's VAPG funding will be used in the production of lavender to infuse into its wines and to use in public culinary classes. These unique products and opportunities will undoubtedly expand the winery's consumer traffic and increase its bottom line.

Top States

The states with the largest number of VAPG awards from today's announcement are Wisconsin (28), Oregon (23), New York (21), California (17), and Missouri (15). NSAC will post more a detailed breakout of VAPG award data on its website, www.sustainableagriculture.net[4] in the near future once additional information is released by USDA.